Katalin Gennburg, Jannis Hertel, Carolin Moje, and Denis Petri COZY LOFT WITH A VIEW OF ­DISPLACEMENT How the rental platform Airbnb is changing Berlin Katalin Gennburg, Jannis Hertel, Carolin Moje, and Denis Petri COZY LOFT WITH A VIEW OF ­DISPLACEMENT How the rental platform Airbnb is changing Berlin IMPRINT published by the Rosa-Luxemburg-Stiftung Responsible: Henning Heine Straße der Pariser Kommune 8A · 10243 Berlin, Germany · www.rosalux.de ISBN 978-3-948250-31-7 · Editorial deadline: May 2021 Cover photo: EPA Editing: Anastasia Blinzov Translation/proofreading: Gegensatz Translation Collective, Berlin Layout/Production: MediaService GmbH Druck und Kommunikation Printed on Circleoffset Premium White, 100 % recycled paper This publication is part of the Rosa-Luxemburg-Stiftung‘s public relations work. It is distributed free of charge and may not be used for electoral campaigning purposes. CONTENTS Introduction 5 A Airbnb’sDevelopmentanditsStrategies 7 B TheimpactofAirbnbonBerlin 14 C Thedifferentaspectsoftheproblem 16 1 The commodification of housing, skyrocketing rent prices, and loss of living space 16 2 Touristification and urban development 18 3 Tax avoidance and tariff evasion 20 4 Competition with the hotel industry 21 5 Data-driven capitalism 22 6 Local regulations vs. Airbnb 23 7 Conflicts and lobbying by Airbnb at the European level 25 D Strategiesforsolutions 27 Theauthors 31 5 N INTRODUCTION o cti u D o Since its founding in 2008, the short-term rental platform ntr Airbnb has given people all over the world the opportunity I to “share” their living space with guests. In the meantime, the California start-up has become a globally active busi- ness. It earned $4.7 billion1 in revenue from short-term rentals in 2019 amidst a global housing crisis and is poised to become the main sponsor of the 2024 Olympics in Paris. In 2020, mention of Airbnb no longer evokes romantic sleeping arrangements in Rome or “sharing is caring”, since the company has become a symbol of platform capitalism and data extractivism, law-breaking, and skyrocketing rent prices. Why have rent initiatives and internet activists made the company into a fiercely fought opponent, and why is the short-term rental platform at the centre of conversations around urban tourism in Europe? The conflict over Airbnb draws together several different contemporary struggles for the right to the city and for urban space. New mechanisms of profiteering and principles of economic exploitation faced particularly by people living in tourist destinations are at the heart of the fight against Airbnb. Many European cities have already announced their intent to push back against the company, and their numbers are growing. Whether in Amsterdam, Paris, Lisbon, Berlin, Prague, or Budapest—all over Europe and even worldwide—neighbours are fighting for their districts, mayors for the power to act locally, and renters’ 1 David Curry, “Airbnb Revenue and usage Statistics (2020)”, Business of Apps, 30 october, 2020, www.businessofapps.com/data/airbnb-statistics/ ; for financial figures since 2015, see Airbnb stock prospectus at: www.sec.gov/Archives/edgar/data/1559720/000119312520294801/d81668ds1. htm#toc81668_1 . Despite a slump in revenue during the Coronavirus pandemic, the company posted a profit of $219 million in the third quarter of 2020 alone; cf. Jörn Brien, “Airbnb macht Gewinn – und drängt trotz Coronakrise 2020 an die Börse”, t3n, 17 November 2020, https://t3n.de/news/airbnb-ge- winn-boersengang-2020-1338202/ . 6 N initiatives against the disappearance of living space. Euro- o cti pean city governments are now joining forces in a network u D of solidarity to demand help from the EU and its Commis- o sion in the fight against the exploitation of urban space.2 It ntr I is clear that the same people whose business model profits from the commodification of urban space are advocating for this economic exploitation. Due to its monopoly status, Airbnb is treated paradigmatically in this paper. Airbnb is now at the centre of urban struggles over space and, as an online platform, has become the epitome of a new kind of conflict over analogue urban spaces in the digital age. To show what caused this, this brochure first contextualizes Airbnb as part of a trend of new, digital capitalism, and then examines the situation in Berlin. We outline seven different problematic aspects of the platform’s business model to show why it is important to deal with Airbnb now and illustrate what possible solutions already exist. 2 Leo Klimm, “Europas Städte verbünden sich gegen Airbnb”, Süddeutsche Zeitung, 17 october 2019, www.sueddeutsche.de/wirtschaft/airbnb-treffen-paris-muenchen-1.4643054. 7 A AIRBNB’SDEVELOPMENT ANDITSSTRATEGIES trategies S The start-up Airbnb started to grow almost incessantly just four years after its founding. The number of listed accom- and its modations rose from 120,000 in 2012 to seven million in 2019—more than the five largest hotel chains combined— pment which amounted to 187 million reservations.3 o el v Airbnb was one of the first platforms for the renting of E D S private rooms as accommodation to be active worldwide, ’ which partially explains its dominant market position irbnb today: the rooms (and later entire houses) on offer and A the smartphone app, introduced in 2010, quickly made Airbnb the first choice for overnight guests. This increased demand and prompted accommodation providers to start renting out accommodation via Airbnb, resulting in a self-reinforcing cycle. This network effect can be attributed primarily to the company’s timing and the fact that they were the first movers. The widespread use of the internet and the increasing spread of smartphones made it possible to book vacation homes flexibly for a few days while on the road. In this way, Airbnb functions as a platform that connects buyers and sellers. The company could even be considered an archetype of platform capitalism, in which the network effect has enabled a single platform to achieve an almost monopoly-like market power. In contrast to Facebook, Amazon, or Google, Airbnb is a “lean” platform with only 6,300 employees as of 2020.4 Other platforms offer their own services: Facebook and Google make money through advertisements, while 3 Curry, “Airbnb Revenue and usage Statistics”, 2020. 4 Keywords: Airbnb, Wikipedia, The Free Encyclopedia, 30 November 2020, https://en.wikipedia.org/w/ index.php?title=Airbnb&oldid=991466056 . 8 Amazon now generates a large part of its profits by renting out servers and cloud computing services (Amazon Web Services). Airbnb, on the other hand, seems to offer little trategies S more than a website. This means that in order to grow and expand into more and more countries, it has to do little and its more than increase its server capacity. The easier it is for a company to scale up, the higher the growth rates that can be achieved (thanks to economic effects of scale). Many pment o “classic” Silicon Valley companies must at the very least el v E have space for storing and delivering their products. For D S ’ Airbnb, however, everything besides running the website is outsourced, and Airbnb leases its servers from Amazon irbnb A Web Services. These promising growth opportunities at a relatively low cost attracted strong financial investors shortly after the company was founded. Airbnb is now posting record revenues, and more than a few people eagerly anticipated the company’s December 2020 IPO. After a number of disappointing IPOs by tech companies such as Wework in 2019, Airbnb caused euphoria among shareholders with its public market debut, in which it gained more than 100 percent in value.5 This was despite the fact that the company was hit hard by the Covid-19 crisis, which resulted in a global decline in tourism in the spring of 2020. A company going public means that financiers and the owners of stock options must have their expectations satisfied and dividends paid, which leads to an increased pressure for value creation. Since this largely depends on accommodation in cities, the company’s integration into 5 Astrid Dörner and Andreas Neuhaus, “Fulminantes Debüt: Airbnb-Aktie legt beim Börsengang mehr als 100 Prozent zu”, Handelsblatt, 11 December 2020, www.handelsblatt.com/finanzen/maerkte/aktien/ online-zimmervermittler-fulminantes-debuet-airbnb-aktie-legt-beim-boersengang-mehr-als-100-pro- zent-zu/26707102.html?ticket=ST-7570152-aqS5PzoPyoA4b7ch2jaI-ap6 . 9 global markets fuels the exploitation of inner cities, which is already well underway. Despite the beleaguered cities’ attempts at regulation, trategies Airbnb’s growth has only increased in recent years. As it has S moved further away from its founding idea (or rather, myth) of renting out an air mattress in a living room, an entire and its network of companies has developed around Airbnb to professionally manage the accommodations it offers. The pment simple idea of brokering accommodation and collecting o el v five to fifteen percent from guests and about three percent E D S from hosts for each booking has created an ecosystem of ’ companies dependent on Airbnb (see graphic on following irbnb page). This is further fuelled by the fact that Airbnb, as a A (supposedly) purely intermediary platform, outsources all other tasks arising from the rental to the hosts, who in turn outsource tasks to specialized service providers. 10 Theuniverseofholidayandshort-termrentals aroundAirbnb trategies S Corp. housing Furnished marketplace and its rental Property operator manager pment marketplace